Column

If blame has to be apportioned for the god-awful mess in civil aviation, and for Air India's latest flirtation with bankruptcy, here's the obvious candidate: Praful Patel, the minister in charge. In the last five-odd years that he has been at the helm, he has, almost single-handedly, brought the sector to its knees. Both airports and airlines are gasping for breath.

The privatisation of the Mumbai and Delhi airports, with its emphasis on high revenue shares for government, resembles Sukh Ram's botched telecom privatisation efforts in the early 1990s. In Sukh Ram's bidding system, aspirants quoted astronomically high prices for various telecom circles. If all bidders had been allotted all their circles at unviable prices, we would still be stuck with antiquated telephony today.

It took more than half a decade and a change of government to unravel that imbroglio. If the telecom sector is India's prime success story in this decade, it is because the government's share of revenue has been brought down to reasonable levels; as the sector boomed, government revenues have gone up in line.

Patel's airport privatisation is nowhere near that happy ending because his policy has imposed high costs on airlines and passengers without commensurate benefits. GMR, the Delhi airport operator, for example, is paying 46% of its gross revenues to government. It has to manage its entire cost of running the airport with the remaining 54%, forcing it to fleece airport users. (Reliance bid less than half of GMR, suggesting that the winning bid was fundamentally unviable). Sooner or later, the basis for revenue-sharing from airport earnings will have to be rejigged if airlines have to prosper.

Airports tend to be natural monopolies within their geographies. Patel made things worse by committing to ensure that there is no competition for privatised airports within a 150km radius. The high licence fees and assurances of monopoly to successful bidders will ensure that both airports and airlines will remain on the fringes of viability.

It may seem a trifle unfair to blame Patel for an airport privatisation policy that the entire Union cabinet approved. But the truth is that in the current coalition structure, where state parties are largely autonomous, their ministers effectively "own" their ministries. Ministers are accountable to their regional party bosses and not necessarily to the prime minister.

In short, the airport policy is more Patel's than anyone else's. He has to take a large part of the flak for the flawed airport privatisation. The best way to rectify the mistake is to lower the revenue share and eliminate the no-competition rule for Delhi and Mumbai airports.

Now, cut to the Air India case. There is no doubt whatsoever that the buck stops with Patel. The unions make no bones of the fact that they hold the minister responsible for the airline's present predicament, but let's dismiss their concerns as partly self-serving. Air India's weak customer service is legendary, and union recalcitrance is much to blame for it. But unions or no unions, can management just throw up its hands and say nothing can be done?

In the public sector, accountability has to be shared between the board and the ministry, for top management is not autonomous. In fact, the Air India board was not a free agent, and depended on Patel for many critical decisions, including the purchase of aircraft and flying rights to various destinations. The board constituted after the merger of Air India and Indian Airlines did not have any independent directors. Patel was thus effectively the final authority. This fact is crucial. As minister, you have to develop policies for an entire sector, but Patel wore two hats as both policy setter and head of a commercial venture that may be affected by his policies.

In the old days, being in the public sector meant you had the minister's ear and could thus influence policy to your advantage. Today, it is the exact opposite, though no one will admit it. The money power of private-sector players has risen dramatically, giving them extra leverage with policymakers. On the other hand, public-sector managements cannot match the lobbying power of private players, since they have no resources to fight this unequal war.

The political grapevine is abuzz with the innuendo that Patel's policies favoured private airlines at the expense of Air India. Given the steep losses the former are in, it is doubtful if they are going to thank him for his alleged favours. What is clear is that Air India was not a free agent under him. Unlike its private rivals, it could not compete on its own terms, and for this Patel is solely responsible. The performance, or non-performance, of an entity without commercial autonomy cannot but be the responsibility of the minister in charge.

In my book, Praful Patel is the man responsible for the aviation crisis. He needs to be reined in, if not asked to go.